Private Equity Fund Accounting - Drawdowns

The DesTek Fund had an initial closing date of 31st December 2013 and total committed capital at that date was $405 million.

Then the GP decided the fund needed $50 million cash by 31st January 2014. This capital will finance portfolio investments or be used to pay fund expenses including management fee. We’ll refer to this first drawdown as Drawdown A. This money will be called from investors in proportion to their % ownership based on committed capital. So, each of the 5 LPs he must pay 19.75% of $50 million, $9,876,543, on or before 31st January 2014. See the table below.

The fund notifies the investors by way of a Capital Call Notice or Drawdown Notice issued to the LPs (sample extract shown below). This demands that the LPs pay the fund a certain amount of capital on or before a certain date, in this case, 31st January.

So after this Drawdown A, what is the situation at fund level? The total commitment amount is $405 million, of which $50 million has been paid in by these investors. So the uncalled capital after Drawdown A is $355 million.

We’ve shown the commitment amounts, the initial closing at 31st December and the first drawdown at 31st January.

What happens next? The DesTek Fund will have a subsequent closing with new investors.